Sun Hydraulics Corp (SNHY)

slbutton (99.78) Submitted: 1/27/2008 7:44:43 PM : Start Price: $27.13 SNHY Score: -7.75

This is one of those companies you can buy for the long term and sleep well at night. Founding management has a big stake in the company but has also created a culture such that the company can (and sometimes does) run efficiently without them (their annual letters to shareholders are required reading). The corporate structure is unusual--no hierarchy, no job titles, no offices--but it seems to work. I'm not all that surprised: my experience with engineers suggests they love to work and usually have a better idea what they should be working on than do their supervisors. They have a stable of innovative products that seem to be miles ahead of the competition. In bad times they retrench and invest in the company rather than trying to prop up the stock price. For all that management likes to emphasize "soft assets," the hard numbers are nothing to sneeze at: their ROE is nearly 27%, operating margin is near 20%, and inventory turns twice as fast as the competition. This for a company that trades at twice sales and four times book value. Oh yes, and their debt is negligible.

As always, do your own due diligence.